Pai does not see any significant increase in IT manpower working on back-end applications, but also not an overall reduction of installed base as new work needs to be done.PTI | November 28, 2016, 08:31 IST

HYDERABAD: Infosys former CFO T V Mohandas Pai acknowledged that 'desi' companies may have underestimated the hostile external business environment and the speed of change in the technology space amid signs of IT slowdown.

"... the external environment is hostile, more than what they had estimated and change has been more rapid," former director and chief financial officer of IT major Infosys, T V Mohandas Pai, told PTI when asked about repeated downward revision of guidance by leading IT players due to fall in export revenue growth.

This is a trend, say analysts, will continue.

On the impact of President-elect Donald Trump, Brexit and possible trade barriers on Indian IT, the technology investor said he expects it to be "very marginal".

"I think more work will come offshore, more innovative work will shift outside the US and the UK. There is a real shortage in these countries. If costs go up because of such shortage, then more work will get automated, move offshore in the next 3-4 years," he added.

On whether he saw Indian IT cannibalising its services, the chairman of Manipal Global Education Services and Aarin Capital Partners said: "Services have been cannibalised for long, it is accelerating now. What Indian IT companies need to do is to focus on future, identify trends, invest in advance and lead change rather than react to change."

Asked if he sees troubled times for Indian IT engineers, Pai said: "Nothing more than what is today. As the industry has grown very large, market is adjusting to lower growth rates. If the industry grows at 7-9 per cent a year when OECD (Organisation for Economic Cooperation and Development) economy is growing at 2-3 per cent, it is pretty good."

Stressing that Indian IT is already "rebooting" itself, Pai said the companies in IT and software services would "sort out" the stress they are facing as they are a globally dominant industry in a very competitive space under pressure.

"Indian IT is rapidly catching up to the digital economy," he said.

On what Indian IT needs to do in the age of automation, Internet of Things, cloud computing and the overall move towards going digital, he said: "To catch trends as they emerge and invest ahead of need, to lead than be led, to innovate faster to lead the market."

Pai does not see any significant increase in IT manpower working on back-end applications, but also not an overall reduction of installed base as new work needs to be done. "As more back-end work gets automated, more work also becomes the back end. (But) growth of manpower is coming down," he added.

He is on the same page as analysts who have projected that traditional customers would spend lesser and lesser on traditional services, predicting that there is going to be only marginal growth in traditional services till 2020, and incremental spending would go to newer areas thereafter.

On doomsday prophecy of "death of code", Pai said: "Code will continue, huge legacy of around USD 4 trillion of code to work on. A large part of new code is getting automated, but building blocks (are) available. The breadth of need is so large that code will never die but can be done easier because of building blocks and automation."

A former chairman of Sebi Primary Markets Advisory Committee, Pai termed as "premature" talk in some quarters that computers in future "will not be programmed but trained as dogs".

"Training a computer by AI, ML (artificial intelligence, machine-learning) needs large number of cases to be out into databases to enable pattern recognition. Analytics would be needed on top and interpretation of analytics and decision making. Rule-based work would be diminished," he added.

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